Still we find many community members who can not distinguish between saving money and investing. The question which then arises is: “Well, then there is no safe place to invest ?”. “Are my funds should not be stored at home alone cupboard or under the pillow?”. Saving money at home are also at risk. The risk of being stolen by a thief, could cause the money we save at home is reduced or lost.
If saving money at home or in the form of savings in bank contain the risk, let alone the name investing. One thing we must always iingat is that no single investment has no risk 100%. Due to this risk, therefore we have to do an analysis before investing in order to minimize this risk (not eliminate).
Moreover, if we invest in the stock market in financial products such as stocks, bonds and derivatives such as mutual funds. In times like now where stock prices were falling, it is definitely our investments will go down. Then How do we minimize that risk? Many ways can be done. The first should always be remembered that investment risk is always directly proportional to their investment. That is, the higher the interest rate or expected results, the higher the risk. As for now there are several investment products that can provide a competitive return on investment (not high) but with a risk controlled (managed). However, there are still many investors who are not using common sense, want to quickly get rich quick by investing in products that promise or lure of high yields.
One theory is often used to minimize the risk is called diversification. Know the term “Do not Put Eggs in One Basket”? Or if you mean about is if we have many eggs do not put all eggs in one basket. So if the basket falls, the eggs will break all. Well, it applies also to our investments. To minimize the risk of not putting our investments to only one product only.
Investment can be done using investment products offered by financial institutions or financial products or using non-financial products as well. Using a combination of these products also help reduce the risk.
Examples of some non-financial products that can be used to invest is: Property (house, apartment, shop, kiosk, etc.), Motor Vehicles, Gold / Precious Metals (jewelry and gold pieces / bars), diamonds and precious jewelry. In addition to some specific groups using paintings, antiques, and many other products that can be used as a vehicle for their investment.
As for financial products such as banking products such as savings, deposits, capital market products such as stocks, bonds (bonds), mutual funds, foreign exchange (currency), indexes, futures and more investment products are offered either sold locally and abroad. For example, when investing in the stock market falls between the months of July until now, our investments in precious metals had climbed to offset the decline in our stock. Although in the end the last precious metals also fell follow-up. Another example, although stock prices were falling, but property prices remain undisturbed. The balance in this investment that minimizes the risk of our investment.
In a certain scale, diversification is not only done by using the products of the domestic investment alone but can also use the products or investments from other countries. But we also have to be careful, in conditions which are highly developed with a network of integrated information and exchanges worldwide, causes a decrease in stock in a country sooner or later will have an impact in other countries, as happened during the Global Crisis of 2008 or when this. That is why the combination of financial products and non-financial services is highly recommended. So when the market is down right now, we do not need to panic anymore.